U.S. stock futures presented a mixed picture Tuesday morning, with the Nasdaq 100 under pressure from a sell-off in semiconductor shares, while the Dow Jones Industrial Average futures edged higher. At 5:50 a.m. EDT, Dow E-minis gained 122 points, or 0.23%, to 53,494.00, while S&P 500 E-minis slipped 10.75 points, or 0.14%, to 7,580.75. The Nasdaq 100 E-minis fell 311.25 points, or 1.04%, to 29,629.75, and Russell 2000 futures added 4.6 points, or 0.15%, to 3,031.60.
The divergence between the Nasdaq and the Dow, a 1.27-point gap in futures performance, highlights a rare split in investor sentiment. While blue-chip stocks remain supported, technology and AI-related names are facing profit-taking concerns.
Chip Stocks Drag Nasdaq Lower
Semiconductor shares led the decline in premarket trading. Micron Technology (MU) shed 5.6%, Western Digital (WDC) dropped 6.2%, and SanDisk (SNDK) gave up 5.2%. Intel (INTC), Marvell Technology (MRVL), and Qualcomm (QCOM) also traded lower. The weakness followed Samsung Electronics' (SSNLF) announcement of a 19-fold surge in quarterly operating profit, which failed to alleviate investor worries about the sustainability of AI-driven earnings growth.
In Seoul, Samsung shares fell sharply despite the record profit. The market's reaction underscores a broader skepticism: even strong earnings from chipmakers may not be enough to justify the lofty valuations baked into current prices.
Market Context and Fed Watch
The mixed futures come as traders await the release of the Federal Reserve's minutes from its June meeting, scheduled for Wednesday. The central bank kept its benchmark rate at 3.50% to 3.75% on June 17. Fed Governor Christopher Waller noted Monday that "risks have completely flipped around now," pointing to higher inflation and steady employment. Tim Duy of SGH Macro Advisors commented that "a rate hike is on the table" for the July 29 decision. Currently, the market prices a 25.5% chance of a 25-basis-point hike and a 74.5% probability of no change.
At Monday's close, the S&P 500 added 0.72% to 7,537.43, the Nasdaq climbed 1.12% to 26,121.16, and the Dow posted a 0.29% gain to 53,055.91. However, breadth was weak: declining stocks outnumbered advancers by 1.3 to one in the S&P 500. Jake Dollarhide, CEO of Longbow Asset Management, noted, "If you're not in certain tech names, if you're not in semiconductors, then you're basically missing the entire rally."
Earnings and Sector Rotations
LSEG data projects second-quarter S&P 500 earnings growth of 24% year over year, with tech earnings expected to rise nearly 65%. Richard Hunter, head of markets at interactive investor, questioned whether AI earnings "can be maintained" after hyperscalers have invested trillions. That concern is central to the current rotation: Morgan Stanley analysts wrote that softness in U.S. semiconductors could signal a shift by investors from chip stocks to AI hyperscalers.
Software names traded higher early, with Microsoft (MSFT), Salesforce (CRM), and IBM (IBM) gaining in premarket, providing support for the Dow. Fiserv (FISV) climbed after Reuters reported the payments company held talks with JPMorgan Chase (JPM) and Bank of America (BAC) about selling its debit-card transaction network business. Rivian Automotive (RIVN) fell after announcing a 75 million-share offering, even though it guided for second-quarter revenue above expectations.
Other Notable Moves
SpaceX (SPCX) fell 1.7% ahead of its Nasdaq-100 debut Tuesday. SK Hynix (000660.KS) is set to begin its U.S. listing later this week, and traders are watching for further signs of chip demand after Samsung's post-earnings drop. Delta Air Lines (DAL) and PepsiCo (PEP) are scheduled to report results later in the week.
Rates remain in focus as the bond market adjusts to the possibility of tighter policy. The yield on the 10-year Treasury note edged higher Tuesday morning, reflecting the hawkish comments from Fed officials.
